I’ll be the first to admit that I made some mistakes when it came to student loans throughout college. Student loans are beneficial in that they allow people to get an education and a degree. But if used incorrectly, they can be a huge drain on your finances. Here are some common mistakes you might make when it comes to student loans.
Student Loan Mistakes
- You don’t think you qualify for financial aid.
So many college students don’t even bother applying for financial aid because they don’t think they can qualify, but that is a huge mistake. You are passing up the opportunity to see if you qualify for grants, which is free money for college that you do not have to pay back. Even if you don’t qualify for a grant, you can qualify for federal loans as opposed to private student loans which come at a lower interest rate. You’ll also find out if you qualify for work study, which is an opportunity to work on your college’s campus to earn money.
- You forget or miss the deadline for the FAFSA.
To find out if you qualify for this financial aid, you must fill out the free FAFSA. You’ll need information about your income and possibly your parent’s income as well as assets. There is a deadline to filling out this information, and it needs to be done either every year or semester, depending on your college. The sooner you fill out the FAFSA, the better because once this financial assistance is used up, it’s gone.
- You have the “borrow now, earn later” mentality.
In my opinion, a lot of the problems with student loans come from the idea that you can borrow as much as you want because in just a few years you’ll be earning a steady, good salary and pay it back with ease. Unfortunately, this isn’t always the case. A lot of recent graduates struggle to find a job once they graduate, or even when they do, it’s not the salary they expected. Plus, even if you do land a job, shelling out a good portion of your hard earned income stings every month. Be conscious of the money you are borrowing, and do everything possible to reduce what you will owe.
- You take out more loans than needed.
Going along with that same borrow now, earn later thought, many college students take out extra loans. Hey, what’s an extra few thousand each semester to be able to live in a nicer apartment, buy some new clothes, take a vacation, or simply have more fun with friends? I get it, but it’s not a good idea. Those extra loans add up quickly, and you’re paying interest on them. Once you’re done with school, working, and trying to pay off those loans, you’ll realize those extra loans weren’t worth it.
- You take more classes than you need.
Depending on where you’re headed to college, one single class can cost hundreds or even thousands of dollars. Taking classes you don’t need to graduate, is a horrible financial mistake. This is a common occurrence when people change their major. It’s tricky because you aren’t just going to stick with something you realize isn’t a good fit for you. To avoid this, really think about your major before you start taking classes for it. Sit in on classes, meet with advisors, talk with professors, shadow people in your field, and do plenty of research on the job outlook, what the job entails, and other working conditions including salary. This way, you aren’t making a rushed decision on a major. Another reason why people take classes they don’t need, is they aren’t quite sure and take something on accident. Requirements for colleges are constantly changing, so it’s a good idea to meet with an advisor in your major’s department every semester to figure out what you should be taking.
- You don’t apply for scholarships.
Scholarships are free money used to apply towards your college education. Many people don’t think they’ll qualify for any scholarships or simply don’t want to take the time to apply. But you never know if you can qualify for a scholarship. You can find scholarships offered through your college, city, state, private organizations, community groups, professional organizations, and much more. Ask your college’s student finance service department on what scholarships your school offers and advice on where to find more.
- You don’t stick to a budget.
Just because you’re in college, doesn’t mean you shouldn’t be trying to stick to a budget. Know where your money is going. You might be shocked to learn what you’re spending on coffees or grabbing a quick bite with friends. Go back over the last three months to see what you spent on food, gas and transportation, entertainment and going out with friends, and all of your other bills, like cable, electric, and rent. See what the average cost was. It might be more than you anticipated. Try to find ways to cut all of those costs down. Make an amount that you’re comfortable spending and stick to it by keeping track of your spending and finding ways to cut costs.
- You don’t really understand how the student loans work.
That saying ignorance is bliss is somewhat applicable to student loans, at least while you’re still in school. It may sound irresponsible, but it’s pretty common for people just to blindly take out the loans, not realizing what they’re paying in interest and what they will actually owe once they get out of school. Even if it’s difficult to accept, really understand what you’re borrowing, the interest, and what the payments will be when you graduate.
- You drop classes.
Two weeks into the semester and you realize you don’t like your professor, you’re having issues in your personal life, or you don’t like the class. Things happen, but once you drop a class, you’re still paying for it if it passed the deadline to which you can drop it without a fee. Before you register, be sure you know the specific date and time when you can drop a class without any fees or penalties.
Why do you think student loans are such a huge problem? What can students and parents do to avoid piling up student loan debt?
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